Morning Report: Inflation comes in as expected

Posted on August 29, 2025 by Brent Nyitray

Vital Statistics:

Stocks are flat ahead of the long weekend. Bonds and MBS are down small.

Personal Incomes rose 0.4% MOM in July, which was in line with Street expectations. Personal Expenditures rose 0.5%, again in line with expectations.

The PCE Price Index (The Fed’s preferred measure of inflation) rose 0.2% MOM and 2.6% YOY. If you exclude food and energy, the index rose 0.3% MOM and 2.9% YOY.

Durable goods inflation increased to 1.1%, while non-durable goods inflation decreased to 0.2%.

Inflation has picked up a touch from Liberation Day, rising about 30 or 40 basis points. But it has not created this huge acceleration back to 6%. At least not yet.

This probably still gives the Fed the green light to cut rates at the September meeting, especially if the jobs report next week is soft again. The Sep Fed Funds futures still see a 87% chance of a rate cut.

Pending Home Sales fell 0.4% MOM in July, according to NAR. This was still a 0.7% YOY increase. “Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant,” said NAR Chief Economist Lawrence Yun. “Buying a home is often the most expensive purchase people will make in their lives. This means that going under contract is not a decision home buyers make quickly. Instead, people take their time to ensure the timing and home are right for them.”

“Rising mortgage applications for home purchase are an early indicator of more serious buyers in the marketplace, though many have not yet committed to a pending contract. The Federal Reserve signaling that they may enact a lower interest rate policy should steadily enlarge the pool of eligible home buyers in the upcoming months.”

MBS spreads continue to improve. MBS spreads are being defined here as the difference between the 30 year fixed rate mortgage and the 10 year Treasury. MBS traders will note that this isn’t exactly correct, but it is close enough for our purposes. The spread has been narrowing for the past couple of years and currently stands at 230 basis points.

On a historical basis going back 40 years, this is still an elevated level. The pre-pandemic years of ZIRP were much lower, and even the pre GFC levels were lower. We are still around 50-60 basis points above normalcy.

Filed under: Economy |

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58 Responses

  1. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on August 31, 2025 at 11:33 am said:

    interesting albeit subjective article on U.S. v EU living standards.

    https://archive.is/ZV6YJ

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  4. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 7, 2025 at 10:00 am said:

    Early “the next Republican POTUS candidate is worse than Trump” messaging is starting

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  5. jnc4p's avatar
    jnc4p, on September 7, 2025 at 10:31 am said:

    Interesting juxtaposition:

    According to Gallup, the Democratic Party is polling at 34 percent — its lowest level in the decades that Gallup has been asking the question. The Democratic Party is polling lower than Donald Trump and lower than the Republican Party.

    Democrats are this unpopular because their own side is losing faith in them. Before the election, 87 percent of Republicans approved of the Republican Party, and 92 percent of Democrats approved of the Democratic Party. Since then, Republicans’ approval of their party has jumped to 91 percent, and Democrats’ approval of their party has fallen to 73 percent.

    That matters. Enthusiasm matters. Trust matters. Democrats don’t just need people to want them to win; they need people willing to help them win. And that’s where things are getting tricky. One flashing warning sign is fund-raising: Democrats are failing to raise money. The Democratic National Committee has been an absolute disaster — at the end of June, it had $15 million on hand; compare that with the Republican National Committee’s $80 million.

    And why would you approve of or donate to the Democratic Party right now? If you are frightened or appalled by what is happening, what are Democrats offering you?

    https://www.nytimes.com/2025/09/07/opinion/trump-senate-democrats-shutdown.html

    vs

    Biden chooses Delaware for presidential library, picks board to raise funds

    The exact site for the center has not been chosen, but the 46th president has a close affiliation with the University of Delaware.

    By Ruby Cramer and Matt Viser

    Former president Joe Biden has chosen Delaware as the home for his presidential library, assembling a new board of friends, advisers and political leaders to decide on a site and begin fundraising the millions of dollars it will take to build the legacy project.

    https://www.washingtonpost.com/politics/2025/09/06/biden-presidential-library-delaware/

    Who cares about stopping fascism when you have a temple to your own narcissism to construct?

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on September 7, 2025 at 11:50 am said:

      I always admired Trump for not building one but I’m pretty sure he’s pursuing funding now, so I guess the question will be where it’s built. My guess is somewhere in Florida, probably one of the universities. That said, I would also think it’s fitting if he picked some prime real estate in Manhattan and making the whole enormous edifice a gilded masterpiece of excess!

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  6. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 10, 2025 at 2:46 pm said:

    Charlie Kirk has been shot at an event in Utah. There is a close up video that, if true, is really bad.

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  7. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 11, 2025 at 9:43 am said:

    If this is true then it seems to demonstrate coordination between the question asked of Kirk right before he was shot.

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  8. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 12, 2025 at 9:09 am said:

    Layers of fact checkers.

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  9. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 12, 2025 at 9:28 pm said:

    Baby, why you make me hit you?

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  12. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 13, 2025 at 7:21 pm said:

    Insert Norm McDonald’s backlash joke here.

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    • Arcanaut's avatar
      Arcanaut, on September 13, 2025 at 10:04 pm said:

      Someone did.

      These people are out of their fucking minds. “What makes me worried about this murder is what someone who is upset about it might do. They’ll probably do something like awful, like murder thousands of innocent people. Or cancel me. That would be worse than any targeted murder of someone I disagree with on things.”

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  14. jnc4p's avatar
    jnc4p, on September 16, 2025 at 12:48 pm said:

    Worth a read:

    https://www.nytimes.com/2025/09/16/opinion/ezra-klein-podcast-ben-shapiro.html

    This was telling:

    What really led off the book is what happens in the introduction. Right after Oct. 7, I was slated to debate at the University of Oxford, and I went into London. My security team told me it was actually too dangerous for me to be in London proper. I had to stay about an hour and a half outside of London, at a beautiful estate that is now turned into a hotel, for safety reasons.

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  15. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 16, 2025 at 5:43 pm said:

    Sweet Jeebus! I’d say this says more about the reporter than anything.

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  17. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 17, 2025 at 9:01 am said:

    Even though Bondi stepped in it, re “Hate Speech”, this made me laugh, inadvertent point made.

    https://althouse.blogspot.com/2025/09/every-time-i-listen-to-lawyer-trained.html?m=1

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  18. jnc4p's avatar
    jnc4p, on September 17, 2025 at 10:30 am said:

    Good Read:

    “The Right Finally Gets Their “George Floyd Moment”

    Michael Tracey

    Sep 17, 2025″

    https://www.mtracey.net/p/charlie-kirk-george-floyd

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  20. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 18, 2025 at 9:23 am said:

    This is a powerful insight and the only roadmap out of a weaponized government, the demonstration of MAD. I don’t think it will work, but there is no other alternative to disarming that I can see.

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  21. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 18, 2025 at 11:18 am said:

    If they didn’t have double standards, they’d have no standards at all.

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  22. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on September 18, 2025 at 11:30 am said:

    Oh no, the left might get so mad they shoot conservatives in the neck.

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  23. Brent Nyitray's avatar
    Brent Nyitray, on September 18, 2025 at 9:12 pm said:

    WSJ is reporting that the decision by Nextstar to pull Jimmy Kimmel was made by senior executives with no contact with the government.

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